Winners and losers from Oxford Economics’ report on manufacturing job growth across US metros

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US manufacturing ebbs and flows across multiple industries. For communities intent on matching economic assets with emerging opportunities, the future is bright.

Sometime in April, if it hasn’t happened already, US manufacturing employment will surge past 13 million total jobs for the first time since November 2008. Back then, manufacturing was in a free fall from its all-time high in May 1979, when the sector employed almost 20 million Americans — the most ever.

But US manufacturing’s modern iteration is different, its industries varied from 1979. 

Oxford Economics is helping us sort out manufacturing’s new personality with its recent analysis of manufacturing job growth across industries – in this case the five sectors (I’ll use ‘sector’ interchangeably with ‘industry’) leading manufacturing’s employment comeback.

The sectors are automotive, computer and electronics, food and beverage, aerospace, and pharmaceuticals. The cities benefitting most are:

  1. Dallas
  2. San Jose
  3. Phoenix
  4. San Francisco
  5. Chicago

Here’s the data, charted (click here for a bigger graph):

 

 

Aside from the obvious top five, here’s my take on winners and losers from the report:

Winners

America’s food and beverage ecosystem is a juggernaut. US F&B manufacturers added 400,000 jobs in the 2010’s and today, most every US metro is home to an innovative, increasingly automated F&B sector.

The community is an innovation machine. It’s also local, it’s well-funded, it’s authentic most of the time (Expo West was a greenwashing festival), it supports rural redevelopment and farmers — and it’s increasingly automated. It all adds up to growth.

Everyone hates on California. To listen to its critics, California’s business community, led by an exodus of manufacturers, is being hollowed out by EVs and bullet trains and taxes and DEI.

But if manufacturing is defined by its diversity, the cross-industry panoply developing here leaves it well positioned. From aerospace in Los Angeles, to “technofacturing” in the Bay Area, to a state-wide automotive supply chain second to none, if California can get out of its own way, manufacturing may bring the besieged state all the way back.

It will be fascinating to review this same chart in five years. What’s happening in south-central Texas may reshape US manufacturing for a generation.

Tesla’s enormous Austin factory is one giant magnet for new business – but just a few miles to the northwest, Samsung is anchoring a semiconductor ecosystem to rival any emerging industrial community in the US – including its TSCM/Intel counterpart rising in the Arizona desert.

Dallas is a city playing to its strengths. Diversity is a social and economic calling card here – and manufacturing is both a beneficiary and an engine of growth. Dallas doesn’t get the manufacturing headlines of its Texas neighbors, but numbers don’t lie in this case. As in #1.

Much like Texas cities, Phoenix is opportunistic, building a business-friendly reputation on available real estate, a population influx, and deliberate strategy to embrace manufacturing. It’s not so much that one attribute or another is a draw; it’s that combined, the sum of the parts happens to align with the needs of manufacturing companies in specific industries.

The key is being deliberate around packaging-up community assets to pursue new manufacturing opportunities in lieu of others.

Losers

On one hand, it’s hard to label an industrial epicenter like Chicago, as a loser relating in anything manufacturing-related – and it’s in the top five on this list.

But are its modern attributes lost in its size and reputation? A giant in agribusiness, chemical and pharmaceuticals, fabrication, and way more, it’s small business community of manufacturers, across multiple industries, is arguably the most compelling ecosystem in the US.

Chicago must aspire to be #1 on this list, the national leader in employment growth. Full stop.

Denver has no such aspiration, and it shows. Its food and beverage sector including a capable and diverse co-manufacturing ecosystem is a national draw for CPG companies, money, and talent (see above), but community leaders here are enamored with the tech industry.

That’s not a bad thing. The plan to chase tech will pay off. Meanwhile, as Denver leans in to a lifestyle-and-high-tech-or-bust approach, Huntsville, AL, its Space Command rival, leans into creating aerospace manufacturing jobs, and today Denver lags behind its more ambitious, smaller counterpart.  It says a lot about Denver’s priorities.

Even if Seattle’s diminished aerospace sector can be chalked up to the struggles of its embattled icon (more on that next time), it’s still disappointing that the town’s fabled innovation ethos isn’t translating to more robust growth, to a maker-community jobs engine. Yes, much is percolating in food and beverage as locavore trends are as pronounced here as elsewhere. But this compelling city, as with others here in the L column, will hopefully show better in the next five years than they do now.

Manufacturing beckons. Who’s in?

Bart Taylor is a BDE at Moss Adams and founder and former publisher of CompanyWeek media. Reach him at bart.taylor@mossadams.com.

Space holds promise for small manufacturers, but modeling success is proving as challenging as the missions

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Here’s how Primes and the companies that fly can make life easier for suppliers

If “Prime” contractors like SpaceX and Lockheed Martin, along with companies like lunar explorer Ultimate Machines, are the public face of America’s new space economy, contract manufacturers and other suppliers to the industry are the glue. Their parts comprise the systems that fly. Without them, without an industrial base of suppliers, there is no burgeoning space industry.

But in key areas — like national defense — it’s an industrial base already in crisis. The National Defense Logistics Agency (NDIA) estimates that the defense industrial base has declined by over 40 percent in the last decade — over 17,000 small businesses in the past five years alone.

There’s no mystery as to why. Government contracting — Department of Defense contracting — is notoriously hard. Fewer entrepreneurs are launching manufacturing companies. And for a new generation of business leaders passionate about manufacturing, other opportunities beckon.

Including space.

But the “space base” is already showing signs of strain. Turns out that space procurement is its own animal. Volumes are lower than traditional aerospace contracts — orders are smaller. Money is also tighter — there’s more upstart commercial work. Turnaround times are truncated. Uncertainty is the rule.

Even its most successful operators are wary. Hernan Ricaurte, principle of Ricaurte Precision Inc. (RPI) and a growing supplier to the space industry, told me, “Working with space companies requires us to be agile given the NPI (new product introduction) to production requirements and tight schedules. It’s an industry,” Ricaurte says, “that’s not for the faint of heart.”

Justin Quinn’s Focused on Machining was an early entry, perched within Colorado’s space-friendly Front Range. “I mean, for a shop like ours, capacity is always the issue.

But it’s not with this type of business. It’s not long-term capacity. In fact, they don’t want to know what you’re doing two months from now. They want to know what you’re doing in the next two weeks,” he laughs. “Parts manufacturing isn’t a two-week proposition. So, that’s where we see the hang up now,” Quinn adds, ” there’s just not a lot of time to react.”

 

 

Quinn’s persevering, as is Mike Sneddon, CEO of SG Aerospace and also a space-industry supplier with clear-eyed views of the ecosystem. I asked Sneddon how he’d launch a contract space manufacturer today. “The only thing you would do is consider it a secondary business or a subsidiary of a current company,” he says. “There’s just no way that you could sustain these [company] conditions in any type of a business model, at least in a business that lasts.”

Sneddon speaks from an enviable position. SG Aerospace was invited to be a supplier to Artemis — NASA’s ambitious program to land the first woman and first person of color on the Moon, explore the lunar surface, and lay the groundwork for sending astronauts to Mars. SG has unique talents. “We do a lot of titanium and stainless — hard metals,” Sneddon says, “that kind of gets us in the door.”

Space is a means to an end for Sneddon, where it’s less than 5 percent of his current business. “Space is by far the hardest. We were trying to use space as a stepping stone into different opportunities, to be able to say ‘Hey, we’ve tackled space, and we’re good at it.'” His Artemis work should validate his approach.

All of this to say that the space industry would do well to avoid the pitfalls that plague procurement in defense-related aerospace and aviation, to attract, not repel, the quality suppliers it needs. Both Quinn and Sneddon have suggestions.

“I think SpaceX has kind of hurt the industry a little bit, as they have this ‘I need everything tomorrow’ kind of mentality,” Quinn says. “It’s becoming the kind of industry that if you say, ‘I can’t get to that right now,’ they won’t hesitate to go down the road and find someone that can. I’m not sure that’s in the industry’s best interest.”

Sneddon sees it similarly. “We understand the need to do good, solid work, and demonstrate we’re passionate about the industry,” he says. “But once you’re in, and you’ve proved yourself, the primes need to [provide some certainty], to establish a time frame and say, ‘OK, give us everything you have for two years, and we’ll set aside work to keep you guys busy and successful.

“It’s already happening with some government contracting, where specific contracts set aside work to keep suppliers engaged and motivated — but still required to meet their commitments,” Sneddon adds. “It’s not a freebie. Just make sure you support suppliers while we make space work for us. Or else many will go under.”

Space missions are hard enough. But in the industry’s rush to be first, highest, and farthest, once again, the uber-important industrial base is now vulnerable. Those that fly, and grab the headlines, would do well to ensure the “space base” prospers.

Bart Taylor is a BDE with Moss Adams and founder and former publisher of CompanyWeek manufacturing media. Reach him at bart.taylor@mossadams.com.